Glazer Family to Sell 5 Percent of Soccer’s Manchester United

A pedestrian carries a Manchester United soccer club megastore shopping bag at the Old Trafford stadium, in Manchester. Photographer: Paul Thomas/Bloomberg

July 31 (Bloomberg) -- Manchester United Plc’s majority
shareholders, the U.S.-based Glazer family, announced plans to
sell 8 million shares, or about 5 percent of the record 20-time
English soccer champion, in a public offering.

The sale of the Class A shares would leave the Glazers, who
also own the National Football League’s Tampa Bay Buccaneers,
with about 85 percent of the club they purchased through a 790
million pound ($1.4 billion) leveraged buyout in 2005. The
Glazers raised $233 million after an initial public offering of
10 percent of the club on the New York Stock Exchange in 2012.

United is seeking to bounce back from its worst Premier
League season, having finished seventh and failed to reach the
elite Champions League. It will start a second straight season
with a new coach after hiring Louis van Gaal to replace David
Moyes, who was fired after one season.

The voting rights of the stock the Glazers are selling are
worth a fraction of their Class B shares, which have 10 votes
per share compared to Class A shares that give owners one vote.

The sale is being handled by Jefferies LLC, BofA Merrill
Lynch, Credit Suisse Securities LLC, Deutsche Bank Securities
Inc. and Nomura Securities International Inc. The underwriters
have the option to purchase a further 1.2 million shares,
according to a news release yesterday announcing the sale.

Manchester United stock closed at $19.31 yesterday in New
York, down 11 cents for the day. No price has been set for the
shares being released. All the proceeds will go to Red Football
LLC, the Glazers’ investment vehicle, and not to Manchester
United, according to the news release.

At yesterday’s closing price, the sale of the 8 million
shares would translate into about $150 million for the family.

Effigy Burned

The Glazers have never been popular with fans of the team,
which was debt free before they purchased the club. The 2005
buyout was financed through 374 million pounds of bank loans and
275 million pounds of notes sold to hedge funds. Fans burned an
effigy of Malcolm Glazer, the late family patriarch, outside the
team’s Old Trafford stadium.

Still, until recently, United enjoyed a successful period,
including five league titles and a European Cup, thanks to the
coaching of Alex Ferguson, the Scot who led the team for 27
years before stepping down in 2013. Almost 700 million pounds
has been spent on servicing the club’s ownership-related debt
since the takeover.

The debt has fallen to about 350 million pounds, while
revenue has grown thanks to better television contracts
negotiated by the Premier League and Manchester United’s appeal
to sponsors. General Motor Co.’s Chevrolet brand will appear on
the club’s shirt for the first time this season following a $559
million deal agreed upon in 2012. Earlier this month, Adidas AG
agreed to pay $1.3 billion for the right to produce United’s
apparel, including its jersey, for 10 years.

Performance-Related Clause

United disclosed to potential shareholders that its
sponsorship deal with Adidas has a performance-related clause
that would reduce the annual amount paid by the sporting goods
company by 30 percent from $131 million to $89 million should
United fail to make the Champions League two straight seasons.

“Our success and many achievements over the last 20 years
does not necessarily mean that we will continue to be successful
in the future, whether as a result of changes in player
personnel, coaching staff or otherwise,” United said in the
share prospectus. “A downturn in the performance of our first
team could adversely affect our ability to attract and retain
coaches and players.”

United is currently touring the U.S. as part of its
preseason training with new squad members including Ander
Herrera and Luke Shaw. The Red Devils played to a 0-0 draw with
Inter Milan two nights ago in Washington before winning a
penalty shootout.